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As COVID-19 batters the local economy, Palo Alto plots a comeback

Original post made on Dec 11, 2020

City leaders have found themselves staring at two distinct but related assignments: manage a raging health crisis and try to save the local economy from falling into a rapid downward spiral.

Read the full story here Web Link posted Friday, December 11, 2020, 6:58 AM

Comments (34)

Posted by Lee Forrest
a resident of Crescent Park
on Dec 11, 2020 at 7:58 am

Lee Forrest is a registered user.

Until the Covid-19 pandemic recedes allowing for normal retail & dining operations, the local economic recession will remain in full swing regardless of any commercial zoning changes.

If full economic recovery is estimated to take four years (or more), alternative 'essential' type businesses may turn out to be the only ones that can flourish during these trying times.

Given the current state mandated pandemic restrictions & in terms of generating a much needed municipal tax base & a per capita economic stimulus, what if the city were to ZONE certain vacant buildings (in commercial zones) for commercial indoor marijuana cultivation?

Call it the PAMC (Palo Alto Marijuana Cooperative) licensed by the city with 50% of the net proceeds going to the city & the other 50% equally dispersed to Palo Alto residents.

Kind of like the oil rebates in Alaska.


Posted by Jane
a resident of Ventura
on Dec 11, 2020 at 9:25 am

Jane is a registered user.

Or we could learn something from the last 10 months and recognize that hamfisted lockdowns don't manage a health crisis, they just magnify the damage. Aside from the destroyed livelihoods and other social harm we've incurred, which will take a decade to reverse, think of the opportunity cost -- all the lost economic resources that could have been directed toward actually protecting the people who need it.


Posted by Annette
a resident of College Terrace
on Dec 11, 2020 at 10:55 am

Annette is a registered user.

We should all thank Miriam Green for what she did b/c her successful lawsuit will prevent shenanigans with utility rates and revenue as a tool for economic recovery. If ever a person should receive a placard of commendation from CC, she should.


Posted by Peter Carpenter
a resident of Menlo Park
on Dec 11, 2020 at 11:06 am

Peter Carpenter is a registered user.

"recognize that hamfisted lockdowns don't manage a health crisis,"

Lockdowns do work - they buy time so that when the lockdown is over there is widespread testing, contact tracing and isolation of infected individuals.

New Zealand, Australia, South Korea and Taiwan all demonstrated this approach.

Lockdowns without aggressive preparation and follow up are useless and harmful.

We keep paying the price of ineffective restrictions because we are not doing the essential companions of widespread testing, contact tracing and isolation of infected individuals.


Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Dec 11, 2020 at 11:27 am

Online Name is a registered user.

@Annette, you bring up an interesting point. For the last several years PA Utilities has run a $20,000,000 surplus every year due to its "overcharges" where they funnel our "surplus charges" into the General Fund. Now we're due a $12,000,000 refund, excluding the $30 a month city utility tax we pay.

Note Green's lawsuit only applied to gas overcharges but what about all the other services and fees charged by PAU? (Check your bills; you'll be amazed.)

However, the "other paper" recently reported that even in this horrible economy PA ran a $34,000,000 surplus "primarily due to PA Utilities" and Diana Diamond's excellent report that the city has made other questionable overcharges, Web Link

So several questions:

1) Where was the oversight by the City Council and other commissions?

2) Are we hurting or running a surplus thanks to these, er, surcharges?

3) When will we get our refunds?

3) How much will our new refund be since we've seen multiple rate hikes since Green filed her lawsuit and since the new "surplus" is reportedly even higher?

4) Will the new refunds apply to services/fees other than gas (which is cheaper than electricity)?

5) Our current city manager managed PA Utilities while these abuses occurred. Will there be a comprehensive review of PAU?

The "dot.bomb" cash was only 20 years ago; they shouldn't be so short-sighted. Perhaps our new council will recognize the dangers of relying so heavily on commuters and business travelers and return to serving -- not ripping off --the community.


Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Dec 11, 2020 at 11:37 am

Online Name is a registered user.

PS: Lee Forest makes excellent points about the lost sales tax revenues from LEGAL marijuana sales which are LEGALLY limited to adults, with PA residents overwhelmingly voting to support marijuana legalization years ago.

Why have we so willingly sacrificed those millions of dollars of sales tax revenues and succumbed to hysterical talks about locking up rooms in houses without children and worrying about children breaking into neighbors' yards to steal plants? It's not as if those 6 measly plants are worth more than than the bikes and catalytic converters stolen every night.

It's also not as if we don't know how to order LEGAL delivery or know the way to San Jose.


Posted by Neal
a resident of Community Center
on Dec 11, 2020 at 11:46 am

Neal is a registered user.

Thomas Adams is dead wrong when he said our economic recovery will take four years. IMHO, if the vaccine is successful the recovery will a lot shorter than 4 years. Our economy is very resilient and there is a pent-up demand for the services that have been been adversely affected by the lockdown.


Posted by Annette
a resident of College Terrace
on Dec 11, 2020 at 11:55 am

Annette is a registered user.

@Online Name: in other words, shenanigans are still possible? If the answer is yes, hopefully community sentiment against the practice will at least impede the practice.


Posted by jc
a resident of College Terrace
on Dec 11, 2020 at 1:04 pm

jc is a registered user.

Cormack suggested allowing traditional retail space to be replaced with "office-like" businesses such as banks, title companies, real estate offices, insurance agents, etc. etc. will make for a more vibrant shopping experience!

Cormack's ludicrous comment strongly appears to be carrying water for commercial property owners who will be then be able to jack up their rents so that in future no traditional retail will be able to compete for rent with these "office-like" uses. Guaranteed to permanently gut retail corridors and reduce sales tax. A complete loss for residents, but a boon for commercial property owners and developers.

For an example of what happens when traditional retail can be replaced with other uses, look no further than what happened to shopping along California Avenue after Liz Kniss advocated successfully to allow gyms to take over traditional retail spaces.

There are also long term implications. "Office-like" uses will eventually lead to quietly converting these leases for pure office use, which the city has no means of keeping track of.

Unfortunately, most council members seem to be completely out of touch with what makes for a practical and successful local shopping experience. They either have no idea or choose to look the other way.

What a contrast with the town of Los Altos whose council have protected the interests of their residents and their traditional shopping core along Main and State.



This is exactly the time to put in place stronger restrictions on retail space so that as the economy comes back retail and personal services can compete with each other for leases, not with office-like businesses such as banks etc.


Posted by Palo Alto Resident
a resident of Downtown North
on Dec 11, 2020 at 2:48 pm

Palo Alto Resident is a registered user.

@Peter Carpenter - I generally agree with your point above, but your examples beg a question - three are islands (Australia, NZ, Taiwan - I'd add Japan to the list); and the last a peninsula with a single closed land border (S. Korea - I'd add Singapore here). All also had the "advantage" of first-hand experience with SARS.

I'd suggest being able to close your border is probably the #1 intervention. Once that's done, a uniform national response driven by public health officials is #2. All the examples did both, and US states simply cannot. If you can't do #1 and #2, it may be impossible to get infection levels low enough that the techniques you mention will be effective.


Posted by Peter Carpenter
a resident of Menlo Park
on Dec 11, 2020 at 3:00 pm

Peter Carpenter is a registered user.

"All the examples did both, and US states simply cannot. "

Of course we could close our borders. Canada has closed its border with the US without a problem.

We simply lack the will and discipline and therefore we are paying a very, very high price.


Posted by Palo Alto Resident
a resident of Downtown North
on Dec 11, 2020 at 3:24 pm

Palo Alto Resident is a registered user.

@Peter Carpenter - I was referring to US states not being able to close borders to other states. Since the US response varies dramatically at the state level, I only considered what states could implement.


Posted by Lee Forrest
a resident of Crescent Park
on Dec 11, 2020 at 3:30 pm

Lee Forrest is a registered user.

A conservative macro-economic perspective...

Web Link

Incredible considering the origin of Covid-19, its pervasive global spread + crippling effects on both the economy & public health followed by a remarkable economic rebound from where it all started...or is this to be believed?


Posted by Peter Carpenter
a resident of Menlo Park
on Dec 11, 2020 at 3:56 pm

Peter Carpenter is a registered user.

"@Peter Carpenter - I was referring to US states not being able to close borders to other states."

With good Federal and State leadership we could dramatically reduce non-essential travel between states and even within states - if that reduction was accompanied by a plan to actually benefit from such restrictions by widespread testing, contact tracing and isolation of infected individuals.


Posted by Lee Forrest
a resident of Crescent Park
on Dec 11, 2020 at 4:07 pm

Lee Forrest is a registered user.

>"With good Federal and State leadership we could dramatically reduce non-essential travel between states and even within states - "

^ How about certain countries as well?
A comprehensive travel ban citing various underlying & legitimate national concerns (including public health, illegal immigration, terrorism & espionage etc.) could kill several birds with one stone including the spread of Covid-19.

After all, the pandemic did not originate in the United States but spread even further via what is often considered nowadays as 'non-essential' moving about.


Posted by [email protected]
a resident of Mountain View
on Dec 11, 2020 at 8:37 pm

[email protected] is a registered user.

Well, add ORACLE as leaving the Valley.

This is just the beginning of the wave.

I do not think the valley will ever RECOVER to what it was prior to COVID, because of the tech industry VACATING the valley for good.

I am also amazed that it is getting to be a game for renters to move to better apartment paying the same rent, and laughing at their older landlords dropping their prices as much as 40% to get a new tenant. It is reported in the following story in New York, but it is happening everywhere, the story is " A Miserable New Hobby: Move for a Better Deal, Then Spite-Watch the Falling Rent on Your Old Place" (Web Link), Specifically:

"For the past five years (until this summer), writer Kate Knibbs lived in a two-bedroom Clinton Hill apartment with her husband and a roommate. But when her lease was up in July — when Manhattan vacancies were skyrocketing and Brooklyn rents sliding — her landlord told her the rent was increasing from $3,250 to $3,300. Knowing that it was a renter’s market, Knibbs attempted to negotiate the price down, pointing to similar apartments going for far less. “We had a really rough spring and we didn’t really wanna deal with moving on top of that,” Knibbs said. Her landlord didn’t budge, so they decided to move out — but she hasn’t exactly moved on. Knibbs kept checking StreetEasy to see if her old apartment had rented already and for how much. That’s when she realized the apartment had been listed for $2,583 per month, $720 less than the landlord had been asking them for."

Mountain View average rents for 1 and 2 bedroom units are down 40% and 30% respectively per the Zumper average website seen here (Web Link)

Palo Alto is currently for 1 and 2 bedroom units are 16% and 26% respectively.

As the tech industry departs, because of AB5 more than anything, because they can't use illegal contractors, the valley is going to see a PERMANENT impact.


Posted by chris
a resident of University South
on Dec 12, 2020 at 1:20 pm

chris is a registered user.

Americans don’t allow their leaders to do what would be necessary to control the virus in short order. Hundreds of thousands of deaths don’t register on the same level as their personal right to “unfettered freedom”.


Posted by Steven Goldstein
a resident of Mountain View
on Dec 12, 2020 at 10:54 pm

Steven Goldstein is a registered user.

[Post removed due to same poster using multiple names]


Posted by Lee Forrest
a resident of Crescent Park
on Dec 13, 2020 at 10:51 am

Lee Forrest is a registered user.

Speaking of 'essential' and/or non-essential businesses allowed to remain open during the pandemic...

In San Diego County, Superior Court Judge Joel J. Wolhfeil ruled that strip clubs can remain open 7 nights a week between the hours of 5-9PM.

Neighbors are now complaining of outdoor tents & sub-woofers blasting away while patrons admire & stuff currency in various G-strings.

One complainant raised the question if hiring nude dancing girls would also allow restaurants, churches & schools to remain open during state & county mandated pandemic restrictions.

source: San Diego Union Tribune 12/13/20 pp.B15


Posted by Rebecca Eisenberg
a resident of Old Palo Alto
on Dec 14, 2020 at 5:16 pm

Rebecca Eisenberg is a registered user.

Only SMALL BUSINESSES are hurt by the Covid downturn.

You forgot to point out that LARGE BUSINESSES based in Palo Alto -- including Tesla and Palantir (which actually IS still here and has not given up any of its office space) -- as well as large companies with big offices here in Palo Alto, such as Amazon.com (Cloud), Facebook (Oculus) and Google (Nest) -- have never been more PROFITABLE!

The experts you quote also say that more than $300 BILLION PROFITS has been made OFF the pandemic by these huge tech conglomerates, a large number of which have big presences right here.

You mocked my argument for a large business tax when I told you that taxing the largest businesses is necessary for the local economy to survive. You questioned and rolled your eyes when I explained that every other city that has enacted a large business tax -- including East Palo Alto, Mountain View, Redwood City -- and EVERY other city with a business presence! -- is using the business tax revenue in part to support the local economy. You said I was "unrealistic" when I pointed out what these same experts say - and literally every other city knows -- it is impossible to recover when the most profitable and wealthy among us not only don't pay their fair share, but in fact, they don't pay a dime.

You were wrong. You still are. Because there is no mystery to this. To recover, we must tax the most profitable and largest big businesses that have a presence here. The more we tax them, the faster we recover.

But thanks to your slanted and counterproductive writing, and your paper's endorsements, you moved us in the exact opposite direction, and that solution - any solution - is far off. You got what you wanted ... or did you?


Posted by Rebecca Eisenberg
a resident of Old Palo Alto
on Dec 14, 2020 at 5:24 pm

Rebecca Eisenberg is a registered user.

As to why companies are leaving the Bay Area -- they have explained this. They are leaving due to lack of infrastructure investment, which makes it too hard for employees to work successfully. They also are leaving due to lack of affordable housing, which makes it too hard to recruit.

Study after study confirms that tax rate has no impact on where a company settles. This is obviously true, and meshes with recent migrations to Texas, which may not have an income tax, but which sure as heck has a business tax, including - even! - business taxes on property that are three times higher than California.

Rather, companies locate where they can find the best employees. Here in the Bay Area, they cannot recruit because fewer and fewer can afford to live here. Cities like Palo Alto (mostly Palo Alto) have caused this problem by failing to produce affordable housing, to preserve what housing there is, and by failing to protect tenants. Without a strong recruiting base, companies move.

Oracle, Tesla, Palantir, and all other California-based (or formerly California-based) companies pay very little business tax in California. Here in Palo Alto, they pay ZERO business tax.

What many people don't recognize is that infrastructure investments like public transportation, and the provision of affordable housing, plus well-funded public schools, all attract not just residents but also businesses.

Want to bring big employers back to California? It's actually the things that higher taxes bring that attract companies, rather than the promise of lower taxes. Specifically, strong public schools, ample affordable housing, robust public transit systems, and a strong community infrastructure all attract businesses. Sometimes things that are GOOD for us actually are good for others too.


Posted by No Tax Texas
a resident of Another Palo Alto neighborhood
on Dec 14, 2020 at 7:16 pm

No Tax Texas is a registered user.

Oh come on. Billionaires Musk and Ellison are running to Texas cause it has no personal income tax and extremely low business taxes.
Greed is the answer.


Posted by Lee Forrest
a resident of Crescent Park
on Dec 15, 2020 at 8:44 am

Lee Forrest is a registered user.

>"Unfortunately, most council members seem to be completely out of touch with what makes for a practical and successful local shopping experience."

^ Given recent developments...most council members seem to be completely out of touch with what makes FOR A PRACTICAL AND SUCCESSFULL 'PALO ALTO' LIVING EXPERIENCE.


Posted by jc
a resident of College Terrace
on Dec 15, 2020 at 12:56 pm

jc is a registered user.

Lee, thank you for quoting me. Never more obvious than during last night's discussion, giving the death knell to traditional retail. No retail property owner is going to lease to retail as long as there is the slightest possibility they can up the rent and convert their space to more lucrative "office-like" uses. This will open the floodgates for a retail death spiral.

As a very long-time council watcher, whenever council says they will "revisit" at some future time, in this case two years, it doesn't happen. Institutional memory is short. Council members leave, it gets forgotten. Is any retail space converted to an "office-like" business going to be evicted in two years if this issue is revisited and the economy recovering? A fait accompli.


Posted by Not worried
a resident of Old Palo Alto
on Dec 15, 2020 at 6:52 pm

Not worried is a registered user.

May 2020 :

Web Link

December 2020: Tesla moves HQ to Austin


Posted by Not worried
a resident of Old Palo Alto
on Dec 15, 2020 at 6:54 pm

Not worried is a registered user.

May 2020: Gavin Newsom not worried about Elon Musk moving Tesla from California

Web Link

December 2020: Elon Musk moves Tesla HQ to Austin


Posted by [email protected]
a resident of Mountain View
on Dec 15, 2020 at 7:49 pm

[email protected] is a registered user.

You remided me of Alfred E. Neuman:

"What Me Worry?"

Too bad MAD Magazine is not published anymore, it would be able to have 300 pages with what is happening to us today.


Posted by CGPA
a resident of Downtown North
on Dec 16, 2020 at 5:41 pm

CGPA is a registered user.

I closed my business downtown after 20+ years, and me and all of the jobs from my company are moving to Texas. If they can run a state without income taxes, there's no reason to pay them here except for sheer stupidity. The work can be done from anywhere. So good luck to all of you suckers continuing to pay taxes that other states don't seem to need.


Posted by [email protected]
a resident of Mountain View
on Dec 16, 2020 at 8:32 pm

[email protected] is a registered user.

In response to CGPA you wrote:

“I closed my business downtown after 20+ years, and me and all of the jobs from my company are moving to Texas. If they can run a state without income taxes, there's no reason to pay them here except for sheer stupidity.”

Believe me it is hard to not agree with you. But you are going to learn that there are other prices that you are going to pay being there. Just understand you can get Snow storms in Texas, but they completely freeze all activities there because they are not like New England where I grew up. You will also deal with Tropical Storms which last year Texas got hit with MANY of them. On top of that there still are extreme cold, extreme heat and extreme humidity which can cost a lot in heating and cooling. Finally, the distances for getting goods are SIGNIFICANTLY longer, so you will find yourself driving a lot more. And there is NO MASS TRANSIT. Maybe you aren’t looking at all the variables.

But none the less the facts are many businesses are doing exactly what you described. You wrote:

“The work can be done from anywhere. So good luck to all of you suckers continuing to pay taxes that other states don't seem to need.”

That kind of simplistic thinking can be dangerous. You cannot determine that a state is managing itself well simply based on the taxes it charges. It also deals with what public services you are given and what price.

Just saying, you should be careful.


Posted by Lee Forrest
a resident of Crescent Park
on Dec 17, 2020 at 10:39 am

Lee Forrest is a registered user.

From a retail standpoint (and presumably a Republican perspective)...

"Most Americans don't need more stimulus, said Judge Glock in National Review.com. People who are still working "have the money and the will to buy things, but they can't, "because stores, restaurants, and hotels are either shut down or considered unsafe. That's why the savings rate jumped from 7 per cent in February to 20 per cent a few months later."

source: The Week/December 18, 2020 pp.7

^ Seriously? No wonder the U.S. economy is floundering...people can't spend all their money due to public health protocols.




Posted by chris
a resident of University South
on Dec 17, 2020 at 7:36 pm

chris is a registered user.

Lee,

Republicans and Democrats should be providing a safety net for those for whom it is unsafe to work.


Posted by Lee Forrest
a resident of Crescent Park
on Dec 17, 2020 at 8:41 pm

Lee Forrest is a registered user.

>"Republicans and Democrats should be providing a safety net for those for whom it is unsafe to work."

^ So should wealthy owners.like Jeff Bezos of mega corporations like Amazon.


Posted by CGPA
a resident of Downtown North
on Dec 22, 2020 at 11:36 pm

CGPA is a registered user.

@Rebecca Eisenberg:

"Palantir (which actually IS still here and has not given up any of its office space)"

Palantir's office space at 100 Alma and the small buildings around the corner are all currently on the market. They really left. And not because of your ridiculous assessment that we aren't spending enough but because we are spending too much, far too much. Read my lips: I'm moving because of too high taxes.

@GoldyCissp: I stopped using public transportation in favor of a bike a long time ago, as the public transportation systems are really just wealth redistribution systems. And there are many nice neighborhoods in Texas that are biking distance to shopping: grocery stores, home improvement stores, big box stores and, ahem, Walmart, which doesn't need to move away from Texas neighborhoods like they did from Downtown Palo Alto because we handed thieves the inventory, $950 at a time.

My total tax bill will drop from $70K to $9K. And my entire home will be air conditioned, instead of pretending it isn't needed here, or getting shut off by a mismanaged utility. Yes, I'll pay an extra $2000 per year, big deal my taxes will drop by 30x that and the difference in home prices will MORE than make up for the utilities. Don't kid yourself, I'll save a bundle.

And Fort Worth gets less than 1" of snow per year -- I'll live. In 2020, they got 2/10ths of an inch in January and a dusting in February. Hold me.

And I won't have to shelter in place for weeks at a time because the state can't manage its forests that catch fire every year, and ...the ever increasing California problems just go on and on.

I'll leave you to deal with all of them. For the next 10 years, I'll save $600,000 in taxes. Best of luck to you all who will have to pay them for me when I take my company and its jobs out of this high tax state.


Posted by Resident 1-Adobe Meadows
a resident of Adobe-Meadow
on Dec 24, 2020 at 7:25 pm

Resident 1-Adobe Meadows is a registered user.

I drove down University this afternoon. I want to see a giant bookstore - everyone went to the Border store to check out the magazines and current books - get a latte and sweet something. I want to see life - people out strolling and enjoying themselves. If you turn that street into financial institutions then no one will be out. Trying to kill the city more than it is? We need life and some stores that children want to go to.


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